Bitcoin regains momentum as investors shrug off banking, Fed concerns

Bitcoin shows its resilience, rebounds past $28K

So much for fear of federal monetary policy, increased regulatory activity and banking crises.

A day after bitcoin plunged following a disappointing — to some observers — rate hike by the U.S. Federal Reserve, investors sent the largest cryptocurrency by market cap hovering above $28,000 again, roughly where it stood earlier in the week when hopes were high for an end to the central bank. bank hawk.

BTC was recently traded at around $28,393, up 3.8% in the last 24 hours. Even that level represented a retreat from higher airs near $29,000 earlier in the day. Bitcoin is up around 22% this month and more than 65% since January 1st.

“The crypto ecosystem is under attack. You see all this regulation enforcement efforts, but also the banking crisis that has spread to banks (that) serve the crypto community,” Benoit Bosc, global product manager at crypto trading firm GSR Markets, told CoinDesk TV. “As a result, you have this flight to quality to the big ones. Bitcoin has benefited the most, and it has risen significantly ever since these events started. This was the case with the action of the Fed yesterday, when they refused to really consider any cuts, but even refused to take a break in the cycle of hiking.”

Bosc said markets bounced back from comments on Wednesday from Fed Chair Jerome Powell and US Treasury Secretary Janet Yellen that reiterated their concerns about inflation. Powell fell short of guaranteeing that the bank would not raise interest rates again, which some Fed critics have blamed for recent banking disasters, and Yellen would not promise to protect all bank deposits in the event of a major widespread sector collapse without congressional approval. In the aftermath, risk assets plunged of almost all stripes, sweeping crypto up.

“The initial reaction is one that is correlated to all risk assets; it’s a little bit down,” Bosc said. “But then after that you become, you know, you have that store of value, the digital gold feature of bitcoin, which is that you still have inflation. They’re fighting it, but it’s still there.

He added: “Bitcoin has a limited supply and so it’s a better option. You also have problems with stable coins. So bitcoin suddenly seems more stable and safe than they are at the moment.”

Ether, the second largest crypto by market capitalization, recently changed hands at $1,810, up 4.6% from the same time on Wednesday. Other major cryptos were mostly in the green, recovering ground lost the day before. Stablecoin XRP and TRX, the token of the blockchain-based platform Tron Network, recently rose by 5.7% and 9.4% respectively. TRX fell the previous day after the US Securities and Exchange (SEC) accused its founder of selling and airdropping unregistered securities, fraud and market manipulation. Litecoin continued its recent momentum, rising 7.8%. The CoinDesk Market Index, a measure of overall market performance, was up 4.2%.

Misdeeds continued to plague the industry as New York federal prosecutors charged Terraform Labs founder Do Kwon with fraud hours after he was arrested by police in Montenegro. On Wednesday, the SEC warned Coinbase that the agency was pursuing an enforcement action against the exchange.

In an email to CoinDesk, Ilya Volkov, CEO of YouHodler, a Swiss-based international fintech platform that offers Web3 crypto and fiat services, noted bitcoin’s resilience after the Fed decision. “Crypto is an integral part of the global financial markets,” Volkov said.

GSR’s Bosc was optimistic about crypto’s future. “You just this morning Do Kwon, and this market, just shrugged it off and continued to rise and stabilize at a level that seemed very high,” he said. “A couple of months ago, nobody thought we would be there. Those events a couple of years ago would have decimated the market. It’s very interesting to see how strong the market is.

He added: “I don’t see it as a risk of rallying. But it gives me a lot of confidence in this ecosystem, this community and the chance of adoption much faster than people expected.”

Institutional investors are holding back

The number of bitcoin addresses with a balance over 1000 BTC has been in a long-term, steady decline since March 2022, decreasing by 12%.

The calculation, which provides insight into the appetite of institutional investors, suggests a reluctance among this important group to add BTC to their coffers at the moment.

Larger ether investors have shown slightly different behavior. Despite the fact that the price movements of BTC and ETH have a traditionally close relationship, their trajectories specific to the number of whales have gone in opposite directions. The number of ETH whales has increased by 5% during the same time period.

The US Securities and Exchange Commission issued a Wells notice to crypto exchange Coinbase, which could lead the SEC to sue Coinbase or take other enforcement action against it. This came as the SEC sued TRON founder Justin Sun on allegations that his projects sold and shipped unregistered securities and committed fraud and market manipulation. Crypto Council for Innovation head of government affairs Brett Quick and Storm Partners managing partner Sheraz Ahmed joined the “First Mover.”